Casting a Broad Net: the Federal Communication Commission's Preemption of State Broadband Internet Regulation

• Publication year: 2022

54 Creighton L. Rev. 41. CASTING A BROAD NET: THE FEDERAL COMMUNICATION COMMISSION'S PREEMPTION OF STATE BROADBAND INTERNET REGULATION

CASTING A BROAD NET: THE FEDERAL COMMUNICATION COMMISSION'S PREEMPTION OF STATE BROADBAND INTERNET REGULATION

Jonathan B. Brown ^[D1]

I. INTRODUCTION ................................... 41

II. REGULATING THE INTERNET .................... 45

A. THE BASICS OF THE INTERNET AND NET NEUTRALITY ..................................... 46

B. FEDERAL REGULATION OF THE INTERNET .......... 49

III. FEDERAL PREEMPTION OF STATE LAW ......... 54

A. CONGRESSIONAL (STATUTORY) PREEMPTION ........ 55

B. ADMINISTRATIVE AGENCY PREEMPTION ............ 58

IV. CASTING A BROAD NET: FCC'S PREEMPTION OF STATE NET NEUTRALITY LAW ............... 63

A. FCCS EXPRESS PREEMPTION PROVISION ........... 66

B. NARROWING THE BREADTH OF FCC'S BROAD PREEMPTION NET ................................ 76

V. CONCLUSION ..................................... 85

I. INTRODUCTION

As a comparatively modern innovation, the internet has become fundamental in our personal and professional lives. With increasing frequency we are introduced to new innovations in internet-based technologies that seek to make our lives easier socially, politically, and economically; changing how we consume our news, transact business, engage in communication, social connections and interactions, relax with entertainment, and even how we shop for our weekly groceries. As just one measure for the total pervasiveness of the internet today, digital ad spending in the United States is expected to finally overtake traditional ad spending (print, television, and radio, combined) in the United States in 2019 with estimated expenditures of $129.34 billion or approximately 54.2 percent of all U.S. ad spending. ^[1]

Yet for the vastness of the internet-in both its role in today's society and in the available content provided by a countless number of content providers (from big companies like Google, Facebook, Amazon, and Netflix, to individual bloggers and today's "social media influencers," and everything in between)-only a relatively few companies, known as internet service providers or "ISPs," provide access to the internet. ^[2] And, importantly, the ISPs themselves provide the critical infrastructure and the network connections necessary to link content providers to the millions of internet users or consumers.

As a small number of ISPs dominate the increasingly salient internet access services market, federal and state legislators, executives, and regulators throughout the United States have begun to take notice. Part of recognizing and accepting the role that the internet (and ISPs as providing access to the internet) plays in today's society is-as legislators, regulators, stakeholders, and others are beginning to do-confronting the issue of whether, how, and to what extent ISPs and the internet more broadly should be regulated.

In 2015, the Federal Communications Commission ("FCC"), for the first time of such magnitude, imposed rigorous regulations and rules on broadband ISPs. In doing so, the federal government had essentially decided as a policy matter that it was necessary to regulate how ISPs were ferrying or conveying the internet to consumers, ultimately connecting them to internet content producers; a regulatory scheme known as "net neutrality." In doing so, the FCC at least implicitly viewed broadband internet as a public (rather than private) good, subjecting it to the regulations more familiar to common carriers of television and telephone services within the modern communications technology industry. ^[3] Just three years later, however, the FCC drastically altered course. Under a new administration focused on deregulation, ^[4] the FCC promulgated an order, the "Restoring Internet Freedom Order," ("2018 Order") that repealed its prior set of rules and regulations concerning broadband ISPs. ^[5]

Under this order, rather than regulating broadband internet as a public good to which the federal regulatory scheme for common carriers applies (as a practical effect, resulting in net neutrality regulations) the new regulatory scheme necessarily viewed broadband internet more like a private good, which is best regulated under a more market-based or laissez-faire approach. Most importantly, although not uniquely in agency rulemaking and regulation, the FCC reinforced its new regulatory scheme by expressly preempting states from imposing any net neutrality-style rules within their own jurisdiction (the same style or type of rules the previous FCC had made federal policy in its 2015 Order and which the FCC disavowed in 2018). ^[6]

Despite the agency's 2018 Order, state legislatures throughout the country maintained a view of the internet as necessarily a public good subject to appropriate regulation. In the 2018 legislative session, five states enacted legislation or adopted resolutions concerning net neutrality and thirty-four states introduced 120 bills or resolutions on the issue of internet regulation and net neutrality. ^[7] In 2019, twenty-nine states introduced legislation concerning net neutrality and four states enacted legislation concerning net neutrality. ^[8] In addition, in 2018, governors in six states signed executive orders that only permit state contracts with ISPs who follow or support net neutrality principles. ^[9] After California passed "one of the strongest net neutrality laws in the nation," the Department of Justice promptly filed suit seeking declaratory and injunctive relief, in large part seeking to invalidate the law under the preemption provision contained within the FCC's 2018 Order. ^[10]

Whether net neutrality regulation-as briefly described in Part II-is appropriate as a policy matter is not the focus of this article and is better left to policymakers and other experts in the field. Rather, this article explores how the FCC's 2018 Order with its express preemption provision fits within the context of well-established administrative law and preemption principles and what it reveals about the state of the delicate balance of federalism, particularly given the now developing federal-state divide as to whether broadband internet should be regulated as a public or private good.

In its 2018 Order, the FCC cast a broad net of preemption over state regulation of the internet, placing a heavy weight on the federal-state regulatory balance in favor of the federal government. While federalism and preemption are not mutually exclusive or contradictory, the ability to displace independent state regulation of the internet-a communications technology and industry in which the States have a vested and important interest ^[11] -should be nonetheless judiciously wielded, as should any exercise of the preemption power. And in a modern system that continues to experience the growth in the role and autonomy of administrative agencies, more opportunities will arise for agencies to be the federal actor that tips the scales in favor of the federal government under the preemption power. At the same time, congressional preemption and preemption by agencies- although both can be valid exercises of the preemption power-are two entirely different propositions.

Recently, in Mozilla Corp. v. FCC, ^[12] the United States Court of Appeals for the District of Columbia Circuit recognized this principle when it invalidated the FCC's exercise of the preemption power in its 2018 Order. In this vein, Part III outlines the principles of federal preemption of state law and also preemption of state law by administrative agencies. Part IV analyzes the FCC's 2018 Order in this context, as well as the D.C. Circuit Court's opinion in Mozilla Corp., and concludes that the FCC's exercise of administrative preemption authority in this case raises important questions as to the seemingly unconstrained power administrative agencies like the FCC assert in the modern regulatory and governmental framework.

II. REGULATING THE INTERNET

To fully understand the implications and importance of potential federal preemption of state law here, it is important to have a basic understanding of the internet and the underlying principles of internet regulation colloquially referred to as "net neutrality." As a relatively modern technology, what we know as the "internet" is, in the most basic sense, a connection (or "network") of computers that are linked together to instantaneously and simultaneously send, release, and request "data packets" of information. ^[13] These packets are transmitted through the network and ultimately re-configured in the form of a webpage, document, or video on a user's computer. ^[14] Perhaps its most important and easily palpable process, the internet operates to connect a myriad of content providers to the end-of-the-line consumer: internet users. ^[15] Today, this connection is facilitated by a number of privately-owned ISPs that provide the final link in the internet chain that directs the packets of information from the network (the "internet") to the consumer's computer. ^[16] In one sense, ISPs provide consumers with the "on-ramp" to the internet. ^[17]

Today, internet consumers primarily rely on the technology of "broadband internet" as that on-ramp to access the internet. ^[18] Broadband internet is generally described as "high-speed internet access that is always on and faster than the traditional...